Why do we need an agreement on shipping emissions? First, because carbon dioxide emissions from shipping cannot be attributed to any specific nation, they are not regulated under the Paris accord.
Shipping is the lifeblood of the global economy
Ships transport about 90 percent of world trade and generate about 3 percent of total global greenhouse gas (GHG) emissions per year — a figure set to increase quickly.
The U.N. Conference on Trade and Development, or UNCTAD, projected that the global shipping industry would grow by almost 3 percent in 2017. Rising consumption in emerging markets will keep demand for shipping high.
In the absence of regulations, the IMO estimates that, at a minimum, shipping emissions will increase 50 percent by 2050, but that increase could be as high at 250 percent. The European Union estimates that without intervention, shipping will account for one-fifth of global emissions by 2050.
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The dirty secret about ships
Ships are very fuel-efficient in terms of transporting cargo, but the heavy fuel oil (HFO) used by 80 percent of the world’s shipping fleet is nasty stuff. It’s more carbon-intensive than other fuels and produces other greenhouse gases as well as air pollutants such as sulfur dioxide, which causes acid rain.
Countries have banned HFO use in Antarctica, for fear of pollution and oil spills that could harm pristine ecosystems. A similar ban has been proposed for the Arctic.
The Organization for Economic Cooperation and Development estimates that new technologies, alternative fuels and renewable energy could almost fully decarbonize the shipping industry by 2035. That would eliminate the equivalent of the annual emissions of 185 coal plants.
Although ambitious goals are technically feasible, politics are the main constraint. Ships are long-term capital investments — so taking older models out of commission before the end of their natural life is a costly proposition.
Progress is incremental
The decision last week creates an emissions cap that many countries had hoped would be more stringent. A coalition of high-ambition nations, led by small island states in the Pacific, pushed for deeper cuts, calling for full shipping decarbonization by 2050.
Nations such as Brazil and Panama — with one of the largest shipping registries in the world — resisted, concerned about detrimental effects on trade. The United States and China, both major emitters and among the top 10 ship-owning nations, were similarly unenthusiastic.
The United States objected to absolute targets (as opposed to carbon-intensity goals) and the division of responsibility between developed and developing nations. Neither the United States nor China signed on to a voluntary declaration in which states affirmed their commitment to a shipping agreement that is consistent with the Paris agreement.
In the end, 50 percent was the compromise target. The agreement is an “Initial Strategy,” which means states must now devise measures to meet the cap, to be finalized by 2023.
The new rules also set targets for efficiency improvements, both in the design of ships and through a carbon-intensity target — which reduces the emissions per ton of cargo by least 40 percent by 2030 and by 70 percent by 2050.
Previous efforts came up short
Though it will not achieve the Paris target, the IMO decision is a first step, as policies to date have failed to tackle the fundamental problem of decarbonizing.
In 2013, the IMO implemented energy-efficiency measures for the largest ships — this has been expanded to cover ship types responsible for about three quarters of world tonnage and 85 percent of the carbon dioxide emissions from international shipping. The rules ratchet up over time, so that by 2025, new ships will be 30 percent more efficient, in terms of average efficiency, than ships built between 2000 and 2010.
But efficiency improvements won’t offset the growth in the number of cargo miles associated with increased global trade. One study shows that although container ships had improved their efficiency by 9 percent, this contributed to just a 1 percent decrease in carbon dioxide emissions overall. And there is a trade-off between efficiency and decarbonizing: Short-term marginal improvements will keep dirtier ships on the seas for longer.
The IMO has also agreed to a global cap on sulfur content in fuel oil, to take effect in 2020. This will improve air quality, have health benefits and increase the attractiveness of lower-carbon ships.
But more ambitious measures have fallen short. In the mid-2000s, the IMO began discussions on market-based measures to curb emissions. The proposals were varied: port state levies, emissions caps coupled with carbon offsetting and old-fashioned cap-and-trade. Ultimately, this was a bridge too far, and the IMO suspended discussions in 2012.
Critics argue that incremental progress, past and present, is unsatisfactory — in part because of the outsize influence of the shipping industry in the IMO rulemaking process. Indeed, it is common practice to have private shipping registry companies represent nation-states at the IMO.
The Marshall Islands, the second-largest shipping registry in the world, has reclaimed authority from International Registries, the private firm that runs its registry out of Reston, Va. For small islands vulnerable to sea-level rise, decarbonizing shipping is a matter of survival.
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The path forward
This is the second sector to institute an emissions cap. In 2016, the aviation industry agreed to tepid rules to reduce emissions. Like shipping, aviation now accounts for about 3 percent of global emissions. And, like shipping, if its activities are left unregulated, that number will grow quickly.
The difference between the two sectors is feasibility of reductions. Although aviation rules could have been more ambitious, there is currently no “clean” way to power planes.
By contrast, a number of measures could drastically reduce shipping emissions right now — existing technology could improve the efficiency in construction and operation of vessels, for instance. Operational rules, such as lowering speeds and reducing ship size, also can make a substantial contribution. And biofuels, electric ships and wind assistance can transition fleets to carbon neutrality.
The current IMO decision is a sign that the world’s shipping companies have to begin to implement changes — and that more countries are slowly coming around to this realization. Leadership from big shipping nations could help accelerate the pace and meet the Paris agreement goal of limiting warming to 1.5 degrees Celsius.
Jessica F. Green (@greenprofgreen) is assistant professor of environmental studies at New York University. She is the author of “Rethinking Private Authority,” published by Princeton University Press.